User Profile

Kinsey Brewer

Bio Statement Eight Steps to Protect Yourself From Tax Identity Theft

Sometimes waiting for your tax refund can feel like waiting for Christmas. Whether you plan to use the money to pay off a loan, buy a new tech gadget or schedule a vacation, it's your money, and you have big plans for it.

But in 2012, nearly 450,000 people didn't get their refunds. Identity thieves did.

That figure was up 78 percent from 2011 when $5.2 billion was lost to identity thieves, according to CNN Money. Even more frightening, that same year, the IRS detected another $6.5 billion in fraud.

Tax identity thieves attack by stealing Social Security numbers and using them to file fraudulent returns. By filing first - or by targeting deceased taxpayers or children - the refund is long gone before the real taxpayer files.

Recognizing tax identity theft as the number one scam at the IRS this year, the agency is cracking down, assigning more than 3,000 employees to work on the problem. But when you consider the millions of returns filed, your best source of protection is yourself.

These tips can help you avoid becoming one of the victims:

  • Guard your financial documents. If you keep financial information online, use firewalls and security products to prevent hacking. If you keep the information on paper - which can actually besafer, if a little old-fashioned - keep the documents in a place where no one has access to them.
  • Don't carry around your Social Security number or any other card or document that has it. Remember that the numbers are also embedded in Medicare numbers, and thieves know how to find them there, too.
  • Shop online with care. Look for "SSL" or "Secure Site" and "https" in the URL when it's time to enter credit card information. Be careful with smaller, unknown retailers, while keeping in mind that even the giants sometimes have their problems.
  • Never conduct financial transactions like tax refund loans online or check accounts on a public server like those at public libraries or coffee shops.
  • Encrypt your documents. If you keep financial information on your computer, purchase encryption software to keep it for your eyes only. At the very least, protect the files with a password.
  • Use difficult passwords. Most people have heard the advice to use different passwords on all your different online accounts, but it's also important to choose safe passwords. Safe passwords contain both upper- and lower-case letters along with symbols and numbers. One way to keep them memorable is to create them from the first letter of each word of a favorite saying.
  • Never give financial information, including bank or Social Security numbers, to someone who called or emailed you requesting them. Don't even consider it unless you placed the telephone call to or visited the known entity on your own. And remember, the IRS will never contact you by email.
  • Check your credit report. Doing so on a regular basis can be one of the most effective ways to discover any kind of identity theft.

If despite your best efforts you become a victim of tax identity theft, alert the IRS immediately. Call the agency's Identity Protection Specialized Unit at 800-908-4490 and complete an identity theft affidavit, Form 14039. The IRS will investigate and try to solve the problem.

Also, be sure to alert credit bureaus, and do so in writing. They are not obligated to put anything in your file if it's not in writing.

Finally, and most importantly if you've been scammed, take heart in knowing the IRS will help you obtain a replacement check for refunds verified as lost or stolen. You'll still get your earned windfall; it just might take a little longer.

Cheryl M. Gill is an attorney with Johns, Flaherty & Collins, SC, ( http://www.johnsflaherty.com ), a full-service law firm based in La Crosse, Wis. According to the Martindale-Hubbell Law Directory, Johns, Flaherty & Collins, SC, has more top-rated lawyers than any other La Crosse law firm.